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Value is key to successful annual-fee credit cards, Citibank says

Citibank Thailand has found that it can benefit from charging annual fees for its specialised credit cards if it targets the right customers, and offers them good value.

The bank's highest annual fee is Bt30,000, for its Ultima cards, which are only available by invitation to customers with a long relationship with the company, or those whose annual credit-card spending has not dropped below Bt2 million for

several years.

Of Citibank Thailand's 1 million credit-hard holders, about 5,000 hold Ultima cards.

"Before inviting customers to become Ultima members, we have to know their habits, because this card might not suit even those who are wealthy," said Natee Srirussamee, head of credit payment products.

Citibank also has the Citi Select card, for which the annual fee is Bt5,000.

Natee said the key to the success of its annual-fee credit cards was offering extra value that customers saw as exceeding the cost of the fee.

Citibank places importance on core value and long-term rewards more than short-term promotions, as it has learned that when the promotion expires, spending slumps as well.

Ninety per cent of Citibank credit cards are active. The bank says average monthly spending is double the Bt5,000-Bt6,000 of other card providers.

Credit cards are regarded as a form of unsecured lending, for which high risk is likely, but Citibank's asset quality in this sector is healthy. Natee said its bad-loan rate was the lowest level in the credit-card industry.

In the card industry overall, the rate of non-performing loans is 2.2-2.3 per cent.

Citibank's credit-card spending in the first quarter grew in line with the market, at 4-5 per cent. It targets annual spending growth of 15-20 per cent.

Several credit-card providers have attempted to pursue customers upcountry, but Natee said Citibank did not have a strong presence in the provinces and

therefore would continue to concentrate on the Bangkok market.

To broaden its customer base in the provincial market, Citibank will focus on main provinces where it has strong partners to ensure a good match between the benefits it offers and the kind of customers looking for that kind of service, he said.


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